Government-Owned Corporation 1 Government-Owned Corporation
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Government-owned corporation 1 Government-owned corporation A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, commercial government agency, public sector undertaking or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government. Their legal status varies from being a part of government to stock companies with a state as a regular stockholder. There is no standard definition of a government-owned corporation (GOC) or state-owned enterprise (SOE), although the two terms can be used interchangeably. The defining characteristics are that they have a distinct legal form and they are established to operate in commercial affairs. While they may also have public policy objectives, GOCs should be differentiated from other forms of government agencies or state entities established to pursue purely non-financial objectives.[1] Government-owned corporations are common with natural monopolies and infrastructure such as railways and telecommunications, strategic goods and services (mail, weapons), natural resources and energy, politically sensitive business, broadcasting, demerit goods (alcohol) and merit goods (healthcare). Definitions GOCs can be fully owned or partially owned by government. As a definitional issue, it is difficult to determine categorically what level of state ownership would qualify an entity to be considered as "state-owned", since governments can also own regular stock, without implying any special interference. As an example, the Chinese Investment Corporation agreed in 2007 to acquire a 10% interest in the global investment bank Morgan Stanley, but it is unlikely that this would qualify the latter as a government-owned corporation. Government-owned or state-run enterprises are often the result of corporatization, a process in which government agencies and departments are re-organized as semi-autonomous corporate entities, sometimes with partial shares listed on stock exchanges. The term 'government-linked company' (GLC) is sometimes used to refer to corporate entities that may be private or public (listed on a stock exchange) where an existing government owns a stake using a holding company. There are two main definitions of GLCs are dependent on the proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (>50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC. A quasi-governmental organization, corporation, business, or agency (parastatal) or a "quasi-autonomous national government organisation" (Quango) is an entity that is treated by national laws and regulations to be under the guidance of the government but separate and autonomous from the government. While the entity may receive some revenue from charging customers for its services, these organizations are often partially or majorly funded by the government. They are usually considered highly important to smooth running of society and are sometimes propped up with cash infusions in times of crisis to help surmount situations that would bankrupt a normal privately owned business. They may possess law-enforcement authority, usually related to their functions. Government-owned corporation 2 Economic sectors Government-owned corporations often operate in sectors where there is a natural monopoly, or where the government has strategic interest. However, government ownership of industry corporations is common. Nationalization also forcibly converts a private corporation into a government-owned corporation. In most OPEC countries, the governments own the oil companies operating on their soil. A notable example is the Saudi national oil company, Saudi Aramco, which the Saudi government bought in 1988 and changed its name from Arabian American Oil Company to Saudi Arabian Oil Company. The Saudi government also owns and operates Saudi Arabian Airlines, and owns 70% of SABIC, as well as many other companies. They are, however, being privatized gradually. Commonwealth In monarchical Commonwealth countries, particularly Australia, Canada and New Zealand, country-wide government corporations often use the style "Crown corporation." Equivalent terms include "State-owned enterprises" and "Crown entities" in New Zealand, and Government Business Enterprise (GBE) in Australia. Examples of Crown corporations include the Canadian Broadcasting Corporation and Air Canada before the latter underwent privatization. Cabinet ministers (Ministers of the Crown) often control the shares in such public corporations. At the level of local government, territorial or other authorities may set up government corporations such as "Local Authority Trading Enterprises" (LATEs). Many local authorities establish services such as water supply as separate corporations or as a business unit of the authority. Australia In Australia the predominant term used for Commonwealth government-owned companies is "government business enterprise" (GBE). Various Australian states also have GBEs, especially with respect to the provision of water and sewerage, but many state-based GBEs were privatized in some states during the last decade of the twentieth century. Commonwealth GBEs include: • the Australian Broadcasting Corporation – fully owned and funded; • the Special Broadcasting Service – fully owned, and combines government funding and commercial funding; • Australia Post – the Australian postal service; and • NBNCo – fully owned and responsible for the rollout of the National Broadband Network. These corporations are overseen by the Department of Broadband, Communications and the Digital Economy. Privatization Former Commonwealth government-owned corporations include Telstra, established in the 1970s as Telecom Australia. Telstra, now Australia's leading telecommunications company, was privatized in 1997 by the government of John Howard. As of June 2010 Telstra owned a majority of the copper wire infrastructure in Australia (the rest is owned by Optus) and is pending sale to its former parent, the Australian government, for a non-binding amount of 11 billion Australian dollars, as ducts in the copper wire tunnels are needed to install the fiber optic cable. In Victoria many GBEs were sold in the 1990s to reduce the state's level of debt. The State Electricity Commission of Victoria and the Gas and Fuel Corporation were the best-known government enterprises to be disaggregated and sold. Government-owned corporation 3 Canada In Canada, state-owned corporations often use the style Crown corporation, indicating that an organization is established by law, owned by the sovereign, and overseen by Parliament and the Cabinet. Examples of Crown corporations include the Canadian Broadcasting Corporation, Canada Post, and ViaRail. Former Crown corporations before their privatization include Air Canada, St. Lawrence Seaway Authority, and Petro-Canada. Ministers of the Crown often control the shares in such public corporations, while Parliament both sets out the laws that create and bind Crown corporations and sets their annual budgets. Crown corporations also exist at the provincial level in Canada. Saskatchewan has maintained the largest number of Crown corporations, including SaskEnergy, SaskPower, SaskTel, SaskWater, and Saskatchewan Government Insurance. Crown corporations of British Columbia include BC Hydro, BC Ferries, BC Housing Management Commission and the British Columbia Lottery Corporation. Privatization, or the selling of Crown corporations to private interests, is very common throughout Canada. Petro-Canada, Canadian National Railway, and Air Canada are examples of former federal Crown corporations that have been privatized. At the provincial level, privatized former Crown corporations include Alberta Government Telephones (which merged with privately owned BC Tel to form Telus), BCRIC, Manitoba Telecom Services, and Potash Corporation of Saskatchewan which retained its name and has become the world's largest producer of potash. Key federally owned corporations include: • Via Rail • Canadian Broadcasting Corporation • Canada Post The Government of Canada owned the airport infrastructure but did not operate the airport (transferred to local airport authorities from Transport Canada): • Toronto Pearson International Airport • Vancouver International Airport • Montréal-Pierre Elliott Trudeau International Airport • Calgary International Airport • Ottawa Macdonald-Cartier International Airport • Edmonton International Airport • Halifax Stanfield International Airport • Winnipeg James Armstrong Richardson International Airport • Victoria International Airport • Kelowna International Airport • St. John's International Airport • Regina International Airport • Saskatoon John G. Diefenbaker International Airport • Prince George Airport • Québec City Jean Lesage International Airport • London International Airport • Thunder Bay International Airport • Montréal-Mirabel International Airport • Aéroport international Pierre-Elliott-Trudeau de Montréal • Fredericton International Airport • Greater Moncton International Airport • Saint John Airport • Gander International Airport Government-owned corporation 4 New Zealand In New Zealand, the terms used for government-owned companies include "state-owned enterprises" and "crown entities". Local government councils and similar authorities